Exhibit 10.51
AGREEMENT FOR THE PURCHASE AND SALE OF ASSETS
THIS AGREEMENT, dated as of December 17, 1997, is made by and among
Landmark Theatre Corporation, a California corporation ("LTC") , Seven Gables
Corporation, a California corporation ("Gables"), Parallax Theatre Systems,
Inc., a California corporation ("Parallax"), San Francisco Landmark Theatre
Corporation, a California corporation ("SFLTC"), and Wisconsin Repertory
Cinemas, Inc., a California corporation ("Wisconsin") The Landmark Theater
Group, a California corporation ("Group"), (LTC, Group, Gables, Parallax, SFLTC
and Wisconsin are collectively and individually called "Seller"), Metromedia
International Group, Inc., a Delaware corporation ("Metromedia"), and Silver
Cinemas, Inc., a Delaware corporation ("Buyer").
RECITALS
A. Seller is engaged in the ownership and operation of movie exhibition
theaters. Seller's operation of the Theaters (as defined below) is referred to
as the "Business".
B. Seller desires to sell to Buyer, and Buyer desires to purchase,
certain of Seller's assets upon the terms and conditions set forth herein.
AGREEMENTS
ACCORDINGLY, in consideration of the premises and the mutual agreements,
covenants, representations and warranties hereafter set forth, the parties
hereto agree as follows:
Section 1. Purchase of Assets by Buyer.
1.1 Agreement to Sell. At the Closing, upon the terms and subject to the
conditions of this Agreement and in reliance upon the representations and
warranties of Buyer in this Agreement, Seller hereby agrees to sell, grant,
convey, transfer, assign and deliver unto Buyer the following assets (the
"Assets"), free and clear of all liens, encumbrances, mortgages, pledges,
claims, charges, security interests, restrictions and rights of others
("Liens"), with the exception of those liens, encumbrances, mortgages, pledges,
claims, charges, security interests, restrictions and rights of others listed on
Schedule 1.1 attached hereto (the "Permitted Liens"), such sale and transfer to
be evidenced by documents reasonably satisfactory to Buyer in form and
substance:
(a) All owned furniture, fixtures, machinery, equipment, computers
(including both hardware and software) and other assets used in connection
with the operation of the theaters as listed in Schedule 1.1(a) attached
hereto (the "Theaters").
(b) All inventory of Seller related to the Theaters on the Closing
Date;
(c) All inventory in the hands of suppliers for which Seller is
committed with
respect to the Theaters as of the date hereof or the Closing Date, as
listed on Schedule 1.1(c) attached hereto;
(d) Leaseholds (including without limitation, to the extent leased by
Seller, land, buildings, structures, fixtures, appurtenances and
improvements) relating to the Theaters, including without limitation the
leases relating to real property listed on Schedule 1.1(d) (the "Leases")
and the fee property (including without limitation buildings, structures,
fixtures, appurtenances and improvements) relating to the Theaters listed
on Schedule 1.1(d)(i) (the "Fee Property");
(e) Certain contracts, trade names and equipment leases to which
Seller is a party listed on Schedule 1.1(e) attached hereto;
(f) The current assets of Seller as set forth on the balance sheet
attached hereto as Schedule 1.1(f), including without limitation, any
security deposits transferred to Buyer under the Leases; and
(g) The name "Landmark Theatre Corporation" and the tradename
"Landmark".
1.2 All Assets Relating to the Theaters. The Assets are intended to and
shall constitute all of the business assets of Seller used in connection with
the operation of the Theaters, with the exception of those assets of Seller
listed on Schedule 1.2 attached hereto (the "Excluded Assets").
1.3 Agreement to Purchase. At the Closing, the Buyer hereby agrees to
purchase from the Seller, upon the terms and subject to the terms and conditions
of this Agreement and in reliance upon the representations and warranties of the
Seller in this Agreement, the Assets. As consideration therefor, the Buyer
shall pay to the Seller the Purchase Price for the Assets.
Section 2. Price and Terms.
2.1 Purchase Price. (a) Buyer shall deliver to Seller, as and for the
purchase price of the Assets, consideration of Sixty Two Million Four Hundred
Seventy Two Thousand Dollars ($62,472,000), as adjusted pursuant to Section
2.1.(b) below and elsewhere herein (the "Purchase Price"), payable by a wire
transfer of immediately available funds to an account designated in writing by
Seller at least two days prior to the Closing Date.
(b) As promptly as possible after the Closing Date, Buyer shall
prepare a Closing Date balance sheet mutually agreeable to Buyer and Metromedia
(the "Final Balance Sheet") reflecting the combined Assets and Assumed
Liabilities (and accruing pro rata amounts including employment obligations).
In the event that Metromedia and Buyer are unable to agree upon a Final Balance
Sheet within thirty (30) days following delivery of a balance sheet, Buyer
and Metromedia shall employ a "Big Six" accounting firm, selected mutually by
Metromedia and Buyer, to resolve such dispute. If the Final Balance Sheet
indicates that current assets, excluding
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cash, less current liabilities exceeds the corresponding number set forth in
Schedule 1.1(f), then Buyer shall pay to Metromedia the difference between such
numbers within five (5) working days of receipt of the Final Balance Sheet. If
the Final Balance Sheet indicates that current assets, including without
limitation any security deposits transferred to Buyer under the Leases, less
current liabilities are less than the corresponding number set forth in Schedule
1.1(f), then Metromedia shall pay to Buyer the difference between such numbers
within five (5) working days of receipt of the Final Balance Sheet. The Final
Balance Sheet will not reflect as a liability any liability for wages, overtime,
severance pay, pay in lieu of notice, or vacation time with respect to employees
of Seller not hired by Buyer since Seller will pay all such costs at or prior to
Closing. In order to prepare the Final Balance Sheet, Buyer shall engage
certain employees of Seller listed on Schedule 2.1(b) (the "Transition
Employees") from the Closing Date for a period of up to six weeks from the
Closing Date (or for a longer time period, if deemed necessary by Buyer to
complete the Final Balance Sheet) (the "Transition Period"). Seller and
Metromedia agree that they shall cooperate with Buyer and the Transition
Employees in making all books and records available to Buyer and the Transition
Employees as necessary to prepare the Final Balance Sheet.
2.2 Liabilities Assumed. (a) Except for the Assumed Liabilities
expressly specified in Section 2.2(b), Buyer has not agreed to pay, shall not be
required to assume and shall have no liability or obligation with respect to,
any liability or obligation, direct or indirect, absolute or contingent, known
or unknown, matured or unmatured, of Seller, any subsidiary or affiliate of
Seller or any other person, whether arising out of occurrence prior to, at or
after the date hereof (the "Excluded Liabilities"). Excluded Liabilities shall
include, without limitation, (i) all fees and expenses incurred by Seller or any
of its affiliates or subsidiaries, in connection with this Agreement; (ii) any
liability or obligation to or in respect of any employees or former employees of
Seller related to their employment or accruing prior to the Closing or as a
result of their termination by Seller including without limitation (w) wages,
overtime, severance pay, pay in lieu of notice, accrued vacation time earned or
accrued prior to the Closing or as a result thereof, other than any accrued paid
vacation days and sick pay for any employees of Seller whom Buyer agrees to
employ ("Employee Costs"), (x) any employment agreement, whether or not written,
between Seller and any person, (y) any liability under any Employee Plan
(defined to include any employee benefit plan, "Employee Benefit Plan," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, "ERISA," and all other benefit arrangements that are not Employee
Benefit Plans, including, but not limited to any employment or consulting
agreement, any arrangement providing insurance benefits, any incentive bonus or
deferred bonus arrangement, any arrangement providing termination allowance,
severance or similar benefits, any equity compensation plan, any deferred
compensation plan, and any compensation policy or practice, "Benefit
Arrangement," (i) which are maintained, contributed to or required to be
contributed to by Seller or any entity that, together with Seller as of the
relevant measuring date under ERISA, is or was required to be treated as a
single employer under Section 414 of the Code, "ERISA Affiliate," or under which
Seller or any ERISA Affiliate may incur any liability, and (ii) which cover the
employees, former employees, directors or former directors of Seller or any
ERISA Affiliate) at any time maintained, contributed to or required to be
contributed to by or with respect to Seller or under which Seller may incur
liability, or any contributions, benefits or liabilities therefor, or any
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liability with respect to Seller's withdrawal or partial withdrawal from or
termination of any Employee Plan and (z) any claim of an unfair labor practice,
or any claim under any state unemployment compensation or worker's compensation
law or regulation or under any federal or state employment discrimination law or
regulation, which shall have been asserted on or prior to the Closing Date or is
based on acts or omissions which occurred on or prior to the Closing Date; (iii)
any liability or obligation of Parent or Seller in respect of any Tax; or (iv)
any liability arising out of occurrences or omissions prior to the Closing. For
purposes of this Agreement "Tax" means any of the Taxes, and "Taxes" means all
federal, state, local and foreign income, capital gains, gross receipts, sales,
use, ad valorem, franchise, capital, profits, license, withholding, employment,
payroll, transfer, conveyance, documentary, stamp, property, excise, value
added, customs duties, minimum taxes, and any other taxes, levies or assessments
of any kind whatsoever, together with additions to tax or additional amounts,
interest and penalties relating thereto that may be imposed by any federal,
state, local or foreign governments.
(b) The "Assumed Liabilities" are the following, which Buyer will assume
at Closing:
(i) Capital leases listed on Schedule 2.2.1;
(ii) Operating leases related to Theaters and Theater equipment
listed on Schedule 2.2.2;
(iii) All liabilities of the Seller under contracts listed on
Schedule 2.2.3 with respect to events occurring after the
Closing Date;
(iv) All current liabilities set forth on the balance sheet
attached as Schedule 1.1(f);
(v) All accrued paid vacation days and sick pay set forth on the
Schedule delivered pursuant to Section 5.14 hereof for any
employees of Seller who become employees of Buyer;
(vi) That certain promissory note dated December 30, 1996 in the
original principal amount of $330,000 made by Gables in
favor of Xxxx Xxxx Ting and Xxx-Xxx Xxxx, which note is
secured by a deed of trust dated as of the same date;
provided that Gables shall make the payment due under such
note on January 6, 1998 and Buyer shall have no liability or
responsibility for such payment.
(c) Except as otherwise provided herein, to the extent that Buyer hires
any employees of Seller, Buyer will thereafter be responsible for any
termination and severance obligations it may have with respect to such employees
including without limitation (a) any and all claims against Seller asserted by
or on behalf of former employees of Seller who commence employment with Buyer on
the Closing Date to the extent such claims are based upon or arise from terms
and conditions of employment after the Closing Date or the termination of such
post-Closing employment; (b) any and all claims asserted by or on behalf of any
former employee of Seller who does not commence employment with Buyer on the
Closing Date but who is employed by Buyer at any time following the Closing Date
relating to such employee's terms and conditions of employment after the Closing
Date or the termination of such post-Closing
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employment and (c) any and all liability for the obligation to provide notice
under the Worker Adjustment and Retraining Notification Act of 1988 ("WARN")
with respect to any "plant closing" or "mass layoff," as those terms are defined
in WARN, for employment losses occurring on the Closing Date caused by Buyer's
failure to offer employment to any employee of the Seller; and
(d) Buyer and Seller may supplement the list of Assumed Liabilities to
include any liability of Seller incurred at Buyer's direction, so long as such
direction is in writing specifically indicating that it is delivered pursuant to
this Section 2.2(e)
2.3 Documents of Sale and Conveyance. The sale, conveyance, assignment,
transfer and delivery of the Assets shall be effected by delivery by Seller to
Buyer of (i) a duly executed xxxx of sale in substantially the form of Exhibit
"A" attached hereto (the "Xxxx of Sale"), (ii) Lease Assignments in recordable
form in substantially the form of Exhibit "B" attached hereto with respect to
Leases already of record (collectively, the "Lease Assignments"), (iii) grant
deeds in recordable form with respect to the Fee Property (collectively, the
"Grant Deeds"), and (iv) such other good and sufficient instruments of
conveyance and transfer listed on Schedule 2.3 attached hereto as shall be
reasonably necessary to vest in Buyer good, valid and indefeasible title to the
Assets (collectively, the "Other Instruments"). In addition, in the event that
Buyer prepares the assignments of trademarks and tradenames in form suitable for
recording in the Patent and Trademark Office with respect to registered
trademarks and tradenames, Seller shall execute such documents.
2.4 Bulk Sales; Sales and Transfer Taxes. Buyer and Seller have agreed
not to comply with the bulk transfer provisions of the bulk sales law of any
state (collectively the "Bulk Transfer Law"). Seller agrees to indemnify Buyer
for any damages, costs, expenses or liabilities asserted against, imposed upon
or resulting from any failure to comply with the Bulk Transfer Law. Buyer shall
have no liability for any federal, state or local tax liabilities of Seller,
including any sales tax or title transfer fee attributable to the sale of Assets
contemplated herein. Any sales, use or similar transfer taxes, and any
transfer, recording or similar fees and charges arising in connection with the
transfer of the Assets from Seller to Buyer shall be borne by the Seller.
2.5 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Assets in accordance with the allocations set forth in Schedule 2.5 to
be agreed upon by Buyer and Seller at Closing. Such allocations shall be
conclusive and binding on both Buyer and Seller for purposes of their federal
and, where applicable, state and local income and transfer tax returns. Buyer
and Seller hereby agree not to take positions on any tax return inconsistent
with such allocation. Buyer and Seller shall prepare and timely file all such
reports and returns as may be required by Section 1060 of the Internal Revenue
Code of 1986, as amended (the "Code") to report such allocation.
2.6 Real Estate Taxes. To the extent payable by tenant, real estate taxes
and assessments relating to the real estate subject to the Leases for the
calendar year of closing shall be prorated between Seller and Buyer as of the
Closing Date. If the amount of such taxes for the year of closing are not yet
available, the proration shall be based upon the amount of such taxes for the
previous year. Upon issuance of the actual tax bills for the year of closing,
the parties agree to recompute the proration based upon the actual tax bills,
and any amount determined to be owing by one party to the other shall be paid by
such party to the other, which obligation
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shall survive the Closing hereunder.
2.7 Proration of Lease Payments, Taxes, Utility Charges, Film Rental and
Other Payments. To the extent not reflected on Schedule 1.1(f), in any case
where the Closing Date shall fall on a date other than the date on which
payments are due with respect to (i) any Leases or (ii) utility or similar
regular periodic charges respecting the Assets for which a final billing has not
been received by Seller, any installment of rental payments and any such utility
or similar charge payable with respect to the current period in which the
Closing Date occurs shall be prorated between Seller and Buyer on the basis of
the actual number of days elapsed from the first day of such period to the
Closing Date. In the event that actual common area maintenance or similar
charges in connection with any Leases for the year of Closing are not available
at the Closing Date, an estimated provisional proration of such charges shall be
made using figures for common area maintenance or similar charges from the
preceding year. When actual figures for such charges become available, a
corrected and definitive proration of such charges shall be promptly made. In
the event that such charges for the year of Closing exceed the amount estimated
in such provisional proration, Seller shall pay Buyer its pro rata share of the
amount by which the actual charges exceeded the estimated charges. Similarly,
in the event that such charges from the year of Closing are less than the amount
estimated in such provisional proration, Buyer shall pay Seller its pro rata
share of the amount by which the estimated charges exceeded the actual charges.
Film rental payments made to the licensors of the films shall be prorated by
Sellers and Buyers as of the Closing Date as soon as the amount of the actual
film rental settlement amounts are paid by the Seller or Buyer, as the case may
be, to the licensors; provided, however, that such settlement shall occur within
60 days after the Closing Date.
2.8 "Phase I" Environmental Surveys. Seller will reimburse Buyer for
fifty percent (50%) of the cost of obtaining a written "Phase I" environmental
survey conducted with respect to the Fee Property. Such Property together with
the property underlying any Lease is individually and collectively referred to
herein as the "Land".
2.9 ADA Survey. Seller has furnished Buyer with complete copies of all
written reports or accessibility surveys in its possession concerning compliance
with the Americans with Disabilities Act of 1990, as amended ("ADA").
2.10 Sales Use and Transfer Tax. Should any sales or use tax be payable in
connection with the sale of assets to be sold by Seller to Buyer pursuant to
this Agreement or should any transfer or similar tax be applicable to any lease
assignment herein contemplated, such sales, use or transfer tax shall be paid by
Seller. The parties shall cooperate in the reporting and settlement of such
taxes.
2.11 Title Policies. At or prior to Closing, Seller shall deliver to Buyer
ALTA owner's title policies covering up to ten (10) Theaters, subject only to
those exceptions acceptable to Buyer (the "Title Policies") and Buyer shall
reimburse Seller fifty percent (50%) of the costs of the Title Policies.
2.12 Closing Date. The consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Xxxxxx &
Xxxxxxx, New York Office as promptly as possible after all conditions to Closing
have been satisfied (the "Closing Date") or at such other location or date as
the parties may agree. The date on which the Closing actually occurs is
hereinafter referred to as the "Closing Date".
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(a) Deliveries by Seller. At the Closing, Seller shall deliver to
Buyer (unless delivered previously), the following (the "Closing
Documents"):
1. the Xxxx of Sale;
2. the Lease Assignments;
3. the Grant Deeds;
4. the Other Instruments;
5. the officers' certificates referred to in Sections 6.1, 6.2
and 6.3 hereof;
6. the opinion of counsel referred to in Section 6.4 hereof;
7. any consents referred to in Section 5.3 hereof;
8. all warranty records, sales literature, licensing records,
service and parts records, and including all other existing records
relating to Seller's business at the Theaters;
9. the documents referred to in Section 6.8 hereof;
10. the documents referred to in Section 6.10 hereof;
11. the Title Policies; and
12. all other previously undelivered documents, instruments and
writings required to be delivered by Seller to Buyer at or prior to
the Closing pursuant to this Agreement.
(b) Deliveries by Buyer. At the Closing, Buyer shall deliver to
Seller the following:
1. the wire transfer of an amount equal to the Purchase Price;
2. the officer's certificates referred to in Sections 7.1, 7.2
and 7.3 hereof; and
3. all other previously undelivered documents, instruments and
writings required to be delivered by Buyer to Seller at or prior to
the Closing.
Section 3. Representations and Warranties by Seller.
Seller represents and warrants the following:
3.1 Organization and Good Standing. Seller is a corporation duly
organized, validly
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existing and in good standing under the laws of the State of California, and has
all requisite corporate power to carry on its business as now conducted by it
and to own and operate its assets as now owned and operated by it. Seller has
no subsidiaries or equity interests in other entities except as set forth on
Schedule 3.1. Seller is qualified to do business and is in good standing in
each jurisdiction where such qualification is necessary, except for such
failures to be so qualified as would not, in the aggregate, have a material
adverse effect on Seller's business or financial condition, the Business, any
Theater or on Seller's ability to consummate the transactions contemplated by
this Agreement ( each a "Seller Material Adverse Effect"). Seller has delivered
to Buyer true and complete copies of the Seller's Articles of Incorporation and
all amendments thereto, certified by the Secretary of State of California, and
the bylaws of Seller as presently in effect, certified as true and correct by
Seller's Secretary. Each Seller is a wholly-owned subsidiary of Landmark
Theatre Group, a California corporation ("Landmark").
3.2 Authority. Seller has all requisite corporate power and authority to
execute and deliver this Agreement and any instruments and agreements
contemplated herein required to be executed and delivered by it pursuant to this
Agreement, including, without limitation, the Xxxx of Sale, the Grant Deeds, the
Lease Assignments and the Other Instruments (collectively, the "Related
Instruments") and to consummate the transactions contemplated hereby and
thereby. This Agreement has been duly authorized, executed and delivered by
Seller, and no other corporate act or proceeding on the part of the Seller is
necessary to authorize the execution and delivery of this Agreement or the
Related Instruments or to consummate the transactions contemplated hereby or
thereby. This Agreement is, and each of the Related Instruments, when executed
and delivered by Seller at the Closing, will be, a legally valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms,
subject to the effects of bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights of creditors and to
general principles of equity, whether considered in a proceeding in equity or at
law.
3.3 No Violation. Subject to receipt of the consents and approvals listed
on Schedule 3.20 and described in Sections 6.7, 6.8 and 5.3 and except as set
forth in Schedule 3.3, neither the execution and delivery by Seller of this
Agreement nor any of the Related Instruments, nor the consummation by Seller of
the transactions contemplated hereby or thereby, will violate any provision of
Seller's (i) Articles of Incorporation or Bylaws, (ii)(a) violate, conflict with
or constitute a default (or an event or condition which, with notice or lapse of
time or both, would constitute a default) under, or (b) result in the
termination of, or accelerate the performance required by, or cause the
acceleration of the maturity of, any liability or obligation pursuant to, under
any note, bond, mortgage, indenture, deed of trust, license, lease, contract,
commitment, understanding, arrangement, agreement or restriction to which Seller
is a party or to which any of the Assets may be subject, (iii) violate any
statute or law or any judgment, decree, order, writ, injunction, regulation or
rule of any court or governmental authority applicable to Seller, or (iv) result
in the creation or imposition of any Lien upon any of the Assets except, in the
case of clauses (ii) and (iii), for violations, conflicts, defaults,
terminations and accelerations which would not, in the aggregate, have a Seller
Material Adverse Effect.
3.4 No Brokerage Commission. Seller has not employed any broker, agent or
finder in connection with any transaction contemplated by this Agreement and
hereby indemnifies Buyer against any liability for a brokerage commission or
finders fee or any description incurred by Seller with respect to any
transaction contemplated by this Agreement.
3.5 No Undisclosed Liabilities. There are no liabilities or obligations
of Seller
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relating to the Theaters or any of the Assets, whether accrued, absolute,
contingent or otherwise, except those specifically described in the exhibits and
schedules attached hereto and those incurred in the ordinary course of business
consistent with past practices since the Balance Sheet Date. Since January 1,
1997, there has been no event or occurrence which has had or could reasonably be
expected to have a Seller Material Adverse Effect.
3.6 Title to Property; Encumbrances. Seller has good and marketable title
to all the Assets. All Assets are free and clear of all Liens except Permitted
Liens. The Assets are in operating condition and repair, subject to ordinary
wear and tear, and are fit and usable for the purposes for which they are being
put. Except as set forth on Schedule 3.6, there are no material repairs or
maintenance required in connection with any Theater.
3.7 Contracts. Attached hereto as Schedule 3.7 is a listing of the
following contracts, understandings, commitments and agreement to which Seller
is a party or is bound related to the Business or the Theaters (the
"Contracts"), copies of which have been provided through due diligence:
(a) All oral or written contracts, understandings or commitments
which are listed on Schedule 1.1(e), whether in the ordinary course of
business or not, involving a present or future obligation of any party in
an amount or value in excess of Fifteen Thousand Dollars ($15,000.00) each;
(b) All Employee Benefit Plans and Benefit Arrangements;
(c) All collective bargaining agreements or other contracts or
commitments (whether written or oral) to or with any labor union, employee
representative or group of employees; and
(d) All employment contracts, and all other contracts, agreements or
commitments (whether written or oral) to or with individual employees for a
period in excess of thirty (30) days or for a renumeration which exceeds or
will exceed in accordance with present commitments, $20,000.00 per annum,
identifying the individual and his or her position.
There has not been any default in any obligation to be performed by Seller under
any Contract which default has had or could reasonably be expected to have a
Seller Material Adverse Effect, and Seller has not waived any right under any
such contract, commitment or agreement, so as to have a Seller Material Adverse
Effect. Copies of all such written contracts and written summaries of all such
oral contracts will be furnished or made available to Buyer within at least
fifteen (15) days of the date hereof.
3.8 Assets Necessary to Business. The Assets constitute all of the
assets, properties, licenses, real and personal property leases, permits,
consents and other agreements which are presently being used or are reasonably
related to the business and operations of the Business as presently conducted,
except for the Excluded Assets.
3.9 Litigation. Except as set forth on Schedule 3.9 and Schedule 3.16,
there is no pending or, to Seller's knowledge, threatened litigation,
arbitration, proceeding or governmental investigation or inquiry, nor, to
Seller's knowledge, is there any basis therefor, affecting the
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Theaters, the Assets or the transactions contemplated hereby in any court or
before any arbitration panel of any kind or before any governmental body.
Except as set forth in Schedule 3.9, there is no outstanding order, judgment or
award of which Seller has received notice by any court, arbitrator or
governmental body against or affecting the Theaters, the Business or the Assets.
3.10 Insurance. Seller now has and has had in full force and effect since
the opening of the Theaters fire, liability, workers' compensation, personal
injury, property damage to third parties and other insurance covering operations
at the Theaters as set forth in Schedule 3.10 attached hereto, in amounts and
against such losses and risks as are therein set out, and valid policies for
such insurance as is shown to be in effect on the date of this Agreement will be
outstanding and duly in force on the Closing Date. Such policies are sufficient
for compliance in all material respects with all requirements of law and all
agreements with respect to the operation of Seller's business at the Theaters;
are valid, outstanding and enforceable policies; provide adequate insurance
coverage for the Assets and the operations of Seller's business at the Theaters;
and the coverage provided thereby, with respect to any act or event occurring on
or prior to the Closing Date, will not in any way be affected by or terminate or
lapse by reason of the transactions contemplated by this Agreement. True and
complete copies of all policies of insurance now in effect have been furnished
to or made available to Buyer except for umbrella policies of Metromedia.
3.11 Inventory. The inventory of Seller on the Closing Date will consist
of items substantially all of which were and will be of the usual quality and
quantity used in the ordinary course of business at the Theaters and reasonably
expected to be usable or saleable within a reasonable period of time in the
ordinary course of business, except items of inventory which have been written
down to realizable market value or written off completely, and damaged, broken
or spoiled items in an amount which does not materially affect the value of the
inventory as a whole. With respect to inventory in the hands of suppliers for
which Seller is committed as of the date hereof or the Closing Date, such
inventory is described in Schedule 1.1(c) and is reasonably expected to be
usable in the ordinary course of business as presently being conducted.
3.12 Improvements, Furniture, Fixtures, Machinery and Equipment. Set forth
on Schedule 1.1(a) are lists as of the date hereof and as of the Closing Date of
each item of improvements (excluding the Theater building itself), machinery,
furniture, fixtures and equipment owned by Seller or the applicable landlord
located at the Theaters.
3.13 Equipment Leased by Seller. Schedule 1.1(e) attached hereto contains
a complete and accurate list of all equipment leases to which Seller is a
lessee, including a description of the equipment, the name and address of each
lessor, the expiration date of each lease, the monthly rent and any additional
rent payable under such lease and whether the consent of the lessor is required
for the consummation of the transaction contemplated. Unless otherwise
indicated on Schedule 1.1(e), each such lease may be cancelled on not more than
ninety (90) days notice. Copies of all such leases have been furnished to or
made available to Buyer. Seller is not in default under any such lease, and
there is not, under any such lease, any event of default or event which, with
notice and/or lapse of time, would constitute a default by Seller or, to its
knowledge, any party to such lease, in each case which could have a Seller
Material Adverse Effect.
3.14 Real Property.
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(a) Schedule 1.1(d) includes a complete and accurate list of all real
property leases related to the Theaters, including the address of each property,
together with the name and address of each landlord, the expiration date of each
lease, the monthly rent, common area maintenance costs, real estate tax charges
and any other amounts due under the Leases (as adjusted from time to time
pursuant to the terms of the Leases) and whether the consent of any other party
is required to consummate the transactions contemplated hereby. True and
correct copies of such leases and any amendments thereto have been made
available to Buyer. The Leases are valid and binding obligations of the parties
thereto and are in full force and effect. Seller has not received written
notice nor to its knowledge is Seller or any other party in default under any
such Lease, and there is not, under any such Lease, any event of default or
event which, with notice and/or lapse of time, would constitute a default by
Seller or, to its knowledge, any other party to such Lease, except as set forth
on Schedule 3.14. Seller has no knowledge of any pending or threatened action
or proceeding which could result in a modification or termination of the zoning
applicable to the real property subject to the Leases. Seller has not received
written notice that any of the real property is subject to any governmental
decree or order to be sold or is being condemned, expropriated or otherwise
taken by any public authority with or without compensation therefor, nor to
Seller's knowledge has any such condemnation, expiration or taking been
proposed.
(b) Schedule 1.1(d)(i) includes a complete and accurate list of all
real property related to the Theaters owned in fee by Seller, including the
address of each property. Seller has no knowledge of any pending or threatened
action or proceeding which could result in a modification or termination of the
zoning applicable to the Fee Property. Seller transfers the Fee Property to
Buyer free and clear of any restrictions which would materially affect the use
for which they are held by Seller. Seller has not received written notice that
any of the Fee Property is subject to any governmental decree or order to be
sold or is being condemned, expropriated or otherwise taken by any public
authority with or without compensation therefor, nor to Seller's knowledge has
any such condemnation, expiration or taking been proposed.
3.15 Employees. Schedule 3.15 contains a list of all employees of Seller
at the Theaters, together with their job titles, amount of compensation, fringe
benefits and date of employment.
3.16 Compliance with Laws; Environmental Matters.
(a) For the purposes of this Agreement, the term "Environmental Laws"
shall mean all applicable federal, state and local environmental protection, or
other similar laws, ordinances, licenses, rules, regulations and permit
conditions, including but not limited to the Federal Water Pollution Control
Act, Resource Conservation & Recovery Act, Safe Drinking Water Act, Toxic
Substances Control Act, Clean Air Act, Comprehensive Environmental Response,
Compensation and Liability Act, Emergency Planning and Community Right to Know
or other applicable U.S. or Canadian federal, state, province, or local laws of
similar effect, each as amended as of the Closing Date, and the term "Hazardous
Materials" shall mean any hazardous or toxic substances, wastes or materials,
including without limitation petroleum or petroleum products, defined as such or
governed by any applicable Environmental Law.
(b) Except as set forth on Schedule 3.16, (i) Seller is in, and to
Seller's knowledge, the Theaters have been maintained in, material compliance
with the terms and conditions of all Environmental Laws and all other laws,
ordinances, rules and regulations and
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has obtained all material permits required to be obtained pursuant to all
Environmental Laws; (ii) no asbestos in a friable condition or equipment
containing polychlorinated biphenyls or leaking underground or above-ground
storage tanks is contained in or located at any Theater as of the Closing Date;
(iii) Seller has fully disclosed all known material past and present
non-compliance with Environmental Laws, and all known past discharges,
emissions, leaking or releases of Hazardous Substances known to Seller; and (iv)
Seller has not received written notice of any past or present events,
conditions, circumstances, activities, practices, incidents, actions or plans
that are alleged to form the basis of any claim, action, suit, proceeding,
hearing or investigation under any Environmental Laws; provided, however, that
clauses (i) through (iv) only address those matters that would have a Seller
Material Adverse Effect.
3.17 Taxes.
(a) All (i) material tax returns required to be filed by or on behalf
of Seller have been filed with respect to all taxes of any kind, (ii) taxes
shown to have been due pursuant to such returns have been paid and (iii) all
other taxes for which a notice of assessment or demand for payment has been
received have been paid.
(b) All tax returns filed by or on behalf of Seller have been
prepared in accordance with all applicable laws and requirements, are correct
and complete and accurately reflect the taxable income (or other measure of tax)
of the entity filing the return in all material respects.
(c) Except as set forth on Schedule 3.17, there are no tax Liens upon
any of the Assets, except Liens with respect to real and personal property taxes
not yet delinquent, and Seller is not aware of any audit or other proceeding or
investigation, or of any position taken on a tax return of Seller which could
give rise to a Lien upon any Assets.
(d) There are no agreements, waivers or other arrangements providing
for an extension of time with respect to the assessment of any tax or deficiency
against Seller, nor are there any actions, suits, proceedings, investigations or
claims now pending against Seller regarding any tax or assessment or any matter
under audit by or discussion with any federal, state, local or foreign authority
relating to any taxes or assessments, or any claims for additional taxes or
assessments asserted by any such authority.
3.18 Employee Benefit Plans - ERISA. Except as set forth on Schedule 3.18:
(a) With respect to any Employee Benefit Plan that is subject to
regulation under Title IV of ERISA ( other than a multiemployer plan, as defined
in ERISA Section 3(37), "Multiemployer Plan"), no Pension Plan has been
terminated so as to subject, directly or indirectly, any assets of Seller or its
ERISA Affiliates to any liability, contingent or otherwise, or the imposition of
any liens under Title IV of ERISA.
(b) With respect to any Multiemployer Plan maintained, contributed to
or with respect to which Seller or any ERISA Affiliate has or had an obligation
to contribute:
(A) Neither Seller nor any ERISA Affiliate has withdrawn from a
Multiemployer Plan in a "complete withdrawal" or a "partial withdrawal" as
defined in Sections 4203 and 4205 of ERISA, respectively, so as to result
in a liability to Seller or
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any ERISA Affiliate which has not been fully paid.
(B) To Seller's knowledge, with respect to each Multiemployer
Plan: no such plan has been terminated or has been in reorganization
under ERISA so as to result in any material liability to Seller or any
ERISA Affiliate under Title IV of ERISA and no proceeding has been
initiated by any person (including the PBGC) to terminate any such plan.
(c) Neither Seller nor any ERISA Affiliate has any liability for
unpaid contributions under Section 515 of ERISA with respect to any Pension Plan
or Multiemployer Plan.
(d) With respect to all group health plans, within the meaning of
Section 5000(b)(1) of the Code, maintained by Seller and its ERISA Affiliates
for the benefit of the employees, former employees and beneficiaries of such
employees and former employees, Seller and its ERISA Affiliates have complied in
all material respects with the provisions of Section 4980B of the Code and Part
6 of Title I of ERISA.
3.19 Books and Records and Financial Statements. Seller maintains its
books, records and accounts, including without limitation, those kept for
financial reporting purposes and tax purposes, with respect to the Theaters in
sufficient detail to reflect accurately and fairly the transactions and
dispositions of its assets and liabilities at the Theaters. All financial
statements delivered to Buyer present fairly the financial condition of the
Seller and the results of their operation at the Theaters. Such financial
statements have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved.
3.20 Consents. Except as set forth on Schedule 3.20, other than the
consent of the lessors under the Leases or any personal property lease and other
than filings under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), no consent, approval, license, permit or authorization
or order of or with any court, governmental body or other person or entity is
required in connection with the execution and delivery of this Agreement by
Seller or the consummation of the transaction contemplated herein.
3.21 Full Disclosure. No representation or warranty of Seller made in this
Agreement (including the schedules, exhibits and other documents delivered
pursuant to this Agreement), or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact which
affects the Assets of Seller, or Seller's title to the Assets or omits or will
omit to state a material fact necessary to make the statements or facts
contained herein or therein not misleading in light of the circumstances when
made. Each of the schedules attached hereto is a true, complete and accurate
list or description, as appropriate, of the items purported to be listed or
described thereon.
3.22 Financial Statements. Seller has delivered to Buyer the
consolidated balance sheet, statement of income and statements of cash flows of
Landmark, at and for the fiscal years ended March 31, 1995 and 1996, the nine
months ended December 31, 1996 and the nine months ended September 30, 1997 (the
"Unaudited Financials"). Such Unaudited Financials are in accordance with the
books and records of Landmark and Seller, fairly present the consolidated
financial position, results of operations and cash flows of Landmark in
accordance with generally accepted accounting principles ("GAAP") on a
consistent basis, except for the absence of
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footnotes and subject to year-end adjustments not material in effect and
consistent with prior years' adjustments.
3.23 Intellectual Property. Schedule 3.23 sets forth a list of all
registered and unregistered trademarks, copyrights, tradenames, service marks,
and all applications for any of the foregoing, used in the operation of the
Business ("Intellectual Property"). Except as set forth on Schedule 3.23,
Seller owns or is licensed to or otherwise has the right to use all such
Intellectual Property, free and clear of all Liens. Seller has not received any
written notice of any claim of infringement with respect to such Intellectual
Property, and to Seller's knowledge there is no basis for any such claim.
3.24 No Material Changes. Since March 31, 1997, the Theaters and the
Business have been operated in the ordinary course, consistent with past
practices, and there has not been any event which has had or could reasonably be
expected to have a Seller Material Adverse Effect. In particular, except in the
ordinary course of business, consistent with past practices, there has not been
any sale or other disposition of material Assets or amendment, cancellation or
termination of any material contract or agreement related to the Assets or the
Business.
Section 4. Representations and Warranties by Buyer.
Buyer represents and warrants the following;
4.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power to carry on its business as now
conducted by it and to own and operate its assets as now owned and operated by
it. Buyer is qualified to do business and is in good standing in each
jurisdiction where such qualification is necessary, except for such failures to
be so qualified as would not, in the aggregate, have a material adverse effect
on Buyer's business or financial condition, the Business or on Buyer's ability
to consummate the transactions contemplated by this Agreement (a "Buyer Material
Adverse Effect"). Buyer has delivered to Seller true and complete copies of the
Buyer's Certificate of Incorporation and all amendments thereto, certified by
the Secretary of State of Delaware, and the bylaws of Buyer as presently in
effect, certified as true and correct by Buyer's Secretary.
4.2 Authority. Buyer has all requisite corporate power and authority to
execute and deliver this Agreement and any instruments and agreements
contemplated herein required to be executed and delivered by it pursuant to this
Agreement, including, without limitation, the Lease Assignments and the Other
Instruments (collectively, the "Related Instruments") and to consummate the
transactions contemplated hereby and thereby. This Agreement has been duly
authorized, executed and delivered by Buyer, and no other corporate act or
proceeding on the part of the Buyer is necessary to authorize the execution and
delivery of this Agreement or the Related Instruments or to consummate the
transactions contemplated hereby or thereby. This Agreement is, and each of the
Related Instruments, when executed and delivered by Seller at the Closing, will
be, a legally valid and binding obligation of Buyer, enforceable against Buyer
in accordance with its terms.
4.3 No Violation. Neither the execution and delivery by Buyer of this
Agreement nor any of the Related Instruments, nor the consummation by Buyer of
the transactions contemplated
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hereby or thereby, will violate any provision of Buyer's (i) Articles of
Incorporation or Bylaws, (ii)(a) violate, conflict with or constitute a default
(or an event or condition which, with notice or lapse of time or both, would
constitute a default) under, or (b) result in the termination of, or accelerate
the performance required by, or cause the acceleration of the maturity of, any
liability or obligation pursuant to, under any note, bond, mortgage, indenture,
deed of trust, license, lease, contract, commitment, understanding, arrangement,
agreement or restriction to which Buyer is a party or to which any of the Assets
may be subject, (iii) violate any statute or law or any judgment, decree, order,
writ, injunction, regulation or rule of any court or governmental authority
applicable to Buyer, or (iv) result in the creation or imposition of any Lien
upon any of the Assets except, in the case of clauses (ii) and (iii) for
violations, conflicts, defaults, terminations and accelerations which would not,
in the aggregate, have a Buyer Material Adverse Effect.
4.4 No Brokerage Commission. Buyer has not employed any broker, agent or
finder in connection with any transaction contemplated by this Agreement and
hereby indemnifies Seller against any liability for a brokerage commission or
finders fee or any description incurred by Buyer with respect to any transaction
contemplated by this Agreement.
Section 5. Agreements by Seller and Buyer.
5.1 Except to the extent waived or consented to in writing by Buyer,
Seller agrees that pending the Closing:
(a) Seller will operate the Business in the ordinary course, consistent
with past practice, and use reasonable commercial efforts to keep the
business of Seller at the Theaters intact (including without
limitation (i) by proceeding with customary advertising and inventory
purchases and (ii) by maintaining its relationships with film
distributors consistent with past practice), to maintain, preserve and
protect the property used to conduct the business at the Theaters, and
to preserve the good will of suppliers and customers and others having
business relations with it;
(b) Seller will promptly notify Buyer of any lawsuits, proceedings, or to
Seller's knowledge, governmental investigations which are threatened
in writing or commenced against Seller, or the officers or directors
of Seller between the date of this Agreement and the Closing Date
which may adversely affect the Business or the transactions
contemplated hereby, except routine personal injury litigation covered
by Seller's insurance.
(c) Seller shall not incur any liabilities or obligations of any nature
(whether absolute, accrued, contingent or otherwise and whether due or
to become due) with respect to the Theaters for which Buyer may be
liable after the Closing, except for trade payables and other
obligations incurred in the ordinary course of business consistent
with past practices;
(d) Seller shall not permit, allow or cause any of its properties or
assets (tangible or intangible) at the Theaters to be subjected to any
Lien other than Permitted Liens;
(e) Seller shall not sell, transfer or otherwise dispose of any of its
assets related to the Theaters (tangible or intangible) except in the
ordinary course of business and
15
consistent with past practices;
(f) Seller shall not terminate or amend in any respect any material
contract, lease, license or other agreement related to the Business or
the Assets to which it is a party;
(g) Seller shall maintain all insurance policies and coverage relating to
the Assets; and
(h) Except as a result of the Closing, which shall trigger a complete
withdrawal as provided in Sections 3 and 4 of ERISA, Seller shall not
agree, whether in writing or otherwise, to do any of the foregoing.
5.2 Supplying of Information. Prior to Closing, Seller shall furnish to
Buyer or its representatives complete and accurate information and access to
facilities and personnel as Buyer may reasonably request in connection with any
audit, review, investigation or examination of the books and records, accounts,
contracts, properties, assets, operations and facilities of Seller.
5.3 Notices and Consents. Subject to Section 6.8 hereof, Seller shall
give all notices to third parties and obtain prior to the Closing all consents
listed on Schedule 3.20 and the consents of the landlords under the Leases
attached hereto or otherwise mutually agreed by Buyer and Seller to be required
in connection with the consummation of the transactions contemplated hereby,
including without limitation, the consent of each lessor of real or personal
property leased by Seller included in the Assets to the assignment of Seller's
interest under such lease to Buyer at the Closing to the extent required. All
such consents shall be in writing and in form and substance reasonably
satisfactory to Buyer and Buyer's counsel and executed counterparts thereof
shall be delivered to Buyer promptly after receipt thereof by Seller but in no
event later than the Closing. Buyer agrees to cooperate with Seller in
obtaining such consents, including without limitation, by way of furnishing
financial and other information as may reasonably be requested by any lessor or
third party whose consent is needed. Buyer and Seller agree to prepare and file
within ten (10) days after the execution of this agreement the premerger
notification required by the HSR Act and to provide such further information as
may be requested by the Department of Justice or Federal Trade Commission in
connection therewith.
5.4 Employees.
(a) On or prior to the Closing Date, Buyer shall advise Seller of
those employees of Seller which Buyer intends to employ. Seller will do nothing
to dissuade any of its employees from remaining in the employ of Buyer after the
Closing Date, and Seller will be responsible for all severance and termination
costs, with the exception of the Employee Costs.
(b) Seller shall be solely responsible for all of the Employee Plans
and all obligations and liabilities thereunder. Buyer shall not assume any of
the Employee Plans or any obligation or liability thereunder.
5.5 Other Transactions. Prior to the Closing, Seller shall not, nor shall
Seller permit any of its officers, directors, stockholders or other
representatives to, (i) directly or indirectly, encourage, solicit, initiate or
participate in discussions or negotiations with, or provide any information or
assistance to, any corporation, partnership, person, or other entity or group
(other than Buyer and its representatives) concerning any merger, issuance or
sale of securities, sale of substantial assets or similar transaction involving
the Assets or the Business, or (ii) entertain or
16
discuss any acquisition or proposals with respect to a substantial portion of
the Assets arising either from parties who previously expressed an interest in
the Assets or from any unsolicited sources.
5.6 Casualty Loss. All risk of loss to the Assets shall remain upon the
Seller prior to the Closing Date.
(a) If prior to the Closing Date, the Assets located in those
Theaters listed in Schedule 5.6 attached hereto (the "Critical Theaters") are
damaged (excluding immaterial damage which does not interfere with the operation
of the Theater) or destroyed by fire or other casualty and cannot be repaired to
Buyer's reasonable satisfaction within 90 days, Buyer may (i) terminate this
Agreement by written notice to the Seller or (ii) close. If Buyer elects to
close despite said damage or destruction to the Critical Theaters, then Buyer
may (i) postpone the Closing Date until such time as the Critical Theaters are
repaired to Buyer's reasonable satisfaction or (ii) elect to close partially by
buying all Assets except the Theater in question and closing on such Theater
when it has been repaired to Buyer's reasonable satisfaction. In the event of a
partial closing, the parties will follow the same provisions as set forth in
Section 5.6(b) below with regard to payment of a portion of the Purchase Price
at Closing and escrow of a portion of the Purchase Price with respect to the
Theater not purchased at the initial Closing.
(b) If prior to the Closing Date, the Assets located in any Theaters
other than the Critical Theaters are damaged or destroyed by fire or other
casualty, Buyer shall withhold from the Purchase Price and deposit into escrow
an amount equal to the twelve months cash flow prior to September 30, 1997
generated for such Theater multiplied by six ("Casualty Payment"). Unless and
until Seller has repaired the damage to such Theater so that such Theater could
be opened to the public, as reasonably acceptable to Buyer, the Casualty Payment
shall remain escrowed; provided that the Casualty Payment shall be released to
Buyer in the event that Seller is unable to satisfactorily repair such Theater
within six (6) months from the date of such casualty.
5.7 Discharge of Liens. Seller shall cause all Liens on any of the Assets
(other than Permitted Liens or Liens not caused by Seller on the Land underlying
a Leased Property) to be terminated or otherwise discharged at or prior to the
Closing.
5.8 No Proceeding or Litigation. Except as set forth on Schedule 3.9,
There shall not be threatened, instituted or pending any suit, action,
investigation, inquiry, injunction, writ or preliminary restraining order or
other proceeding by or before any court or governmental or other regulatory or
administrative agency or commission requesting or looking toward an order,
judgment or decree which (a) seeks to restrain or prohibits the consummation of
the transactions contemplated hereby or (b) could reasonably be expected to have
a Seller Material Adverse Effect.
5.9 Earthquake Reinforcements. Prior to Closing, Seller shall construct,
to the reasonable satisfaction of Buyer, any improvements in connection with the
Theaters known as the California Theater and the UC Berkeley Theater necessary
to ensure that such Theaters comply with (a) all statutes, rules and regulations
governing earthquake and seismic reinforcement and (b) all applicable
requirements of the leases governing such Theaters. Alternatively, Seller may
elect to reduce the Purchase Price by One Million Four Hundred Thousand Dollars
($1,400,000).
17
5.10 [Intentionally Omitted]
5.11 Parking Issues. From the Closing and through the third anniversary
thereof, Buyer and Seller shall share equally the actual costs in connection
with providing parking for the Theater known as the Metro Ten and Seller agrees
to promptly reimburse Buyer for its share of such costs. Buyer acknowledges
that Seller is currently involved in pending and/or threatened litigation
concerning parking for the Metro Ten Theater. Seller acknowledges that,
notwithstanding the next sentence, Seller will remain liable for all claims,
costs, attorneys fees, expenses, judgments, settlements and damages relating to
such litigation in connection with parking issues at the Metro Ten Theater.
Buyer shall have the right to control such litigation and to defend, settle or
take to trial any claims raised therein, all at Seller's expense. Buyer agrees
to provide to Seller in writing a status report on the litigation (a) on a
quarterly basis and (b) upon the occurrence of any major development
5.12 Construction of Theaters. Buyer and Seller agree that Buyer shall
have the right, upon written notice to Seller, from and after the date of this
Agreement through the Closing to supervise and take over the construction of the
Theaters located in Waltham Massachusetts and St. Louis Missouri to ensure such
construction complies (and Seller agrees to cause such Theaters to comply) in
all material respects with all governmental requirements including, without
limitation, zoning rules and regulations, building codes and the ADA. Buyer
will pay for all changes it requires in excess of Seller's present construction
budget which has been provided to Buyer, including any incidental costs related
to Buyer's requests for changes.
5.13 Home Office Lease. Seller agrees to complete the build-out of the
improvements set forth on Schedule 5.13 in connection with Seller's corporate
offices located at 0000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx (the
"Corporate Offices"), in exchange for which, Buyer will assume the obligations
under the leases governing the Corporate Offices; provided that Seller will not
be required to complete the screening rooms at the Corporate Offices and that
Seller will not be required to spend more than $50,000 from the date of this
Agreement to complete such build-out.
Section 6. Conditions Precedent to the Obligation of Buyer to Close.
The obligation of Buyer to close shall be subject to the following
conditions precedent:
6.1 Fulfillment of Covenants. Seller shall have performed and complied in
all material respects with all covenants, obligations and agreements as set
forth in this Agreement to be so performed or complied with by it at or prior to
the Closing, and Seller shall deliver to Buyer a certificate dated as of the
Closing Date executed by an executive officer of Seller so stating.
6.2 Representation and Warranties. The representations and warranties of
Seller contained in this Agreement shall be complete and accurate in all
material respects on the date when made and shall also be accurate on the
Closing Date to the same extent as if made on such date. Seller shall deliver
to Buyer a certificate dated the Closing Date and executed by an
18
executive officer of Seller stating that said representations and warranties are
true, correct and accurate in all material respects on the date hereof and as of
the Closing Date and that all covenants, agreements and conditions required by
this Agreement to be performed by Seller prior to Closing have been performed on
or prior to the Closing Date.
6.3 Corporate Approval. Buyer shall have received a copy of the
resolution of the Board of Directors of Seller, certified by its Secretary or an
Assistant Secretary, authorizing the execution of this Agreement and the
consummation of the transactions contemplated hereby.
6.4 Opinion of Seller's Counsel. At the Closing Date there shall have
been delivered to Buyer an opinion from counsel for Seller, dated as of the
Closing Date, acceptable to counsel for Buyer, to the effect that:
(a) Seller is a corporation duly incorporated and validly existing in
good standing under the laws of the State of California. Seller has
corporate power and authority to own its properties and to conduct its
business. Seller is qualified to do business and in good standing in each
jurisdiction in which a Theater is located;
(b) The execution of this Agreement and the Other Instruments by
Seller, the delivery to Buyer, and the performance of their respective
terms have been duly authorized by Seller;
(c) No authorization, approval, consent or license of any regulatory
body or authority is required for the sale and delivery of the Assets,
which has not been obtained;
(d) The consummation of this Agreement will not and does not violate
(i) the Articles of Incorporation or Bylaws of Seller, (ii) breach or cause
a default under any term or provision of any material contract identified
to such counsel by Seller as one to which Seller is a party or by which any
of Seller's assets are bound; or (iii) violate any judgment, decree,
injunction, writ or order identified to such counsel by Seller as
applicable to Seller; or (iv) breach or violate any law, rule or regulation
applicable to Seller; and
(e) Each of this Agreement and the Other Instruments to which Seller
is a party is a legally valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms; subject to the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors and other customary
exceptions reasonably acceptable to Buyer's counsel.
6.5 No Material Adverse Changes. No occurrence constituting or having a
Seller Material Adverse Effect shall have occurred.
6.6 Documents. All documents required by this Agreement to be delivered
by Seller to Buyer at the Closing shall be in substance reasonably satisfactory
to Buyer and shall have been executed and delivered to Buyer.
6.7 Consents and Approvals. The waiting period under the HSR Act shall
have expired. All licenses, permits, consents, approvals and authorizations of
all third parties and governmental bodies and agencies required by this
Agreement shall have been obtained
19
and provided to Buyer.
6.8 Certain Real Estate Documents. Seller shall use its reasonable good
faith efforts to have delivered to Buyer the consents referred to in Section 5.3
(the "Consents"), Estoppel Certificates, Non-Disturbance Agreements and
Memoranda of Lease in the forms of Exhibit "D", Exhibit "E" and Exhibit "F"
hereto, respectively, from lessors and mortgagees, respectively, with respect to
each of the real property leases listed on Schedule 1.1(d) with such changes
requested by such lessors and mortgagees, respectively, agreed to in the
reasonable discretion of Buyer.
6.9 No Proceeding or Litigation. There shall not be threatened,
instituted or pending any suit, action, investigation, inquiry, injunction, writ
or preliminary restraining order or other proceeding by or before any court or
governmental or other regulatory or administrative agency or commission
requesting or looking toward an order, judgment or decree which (a) seeks to
restrain or prohibits the consummation of the transactions contemplated hereby
or (b) might have a Seller Material Adverse Effect.
6.10 Non-Compete. Buyer and Metromedia shall have executed and delivered a
mutually satisfactory non-compete agreement.
6.11 Audited Financial Statements. Seller shall have delivered to Buyer by
December 31, 1997 the consolidated balance sheet, statement of income and
statements of cash flows of Landmark, at and for the fiscal years ended March
31, 1995 and 1996 and for the nine month period ending December 31, 1996,
accompanied by the unqualified audit opinion of a "Big Six" accounting firm (the
"Audited Financials"). Such Audited Financials will be the same in all material
respects as the Unaudited Financials, fairly present the consolidated financial
position, results of operations and cash flows of Landmark in accordance with
generally accepted accounting principles ("GAAP") on a consistent basis. Buyer
shall reimburse Seller fifty percent (50%) of all costs incurred by Seller
solely in connection with the preparation of such Audited
Financials in connection with the transaction contemplated by this Agreement.
Section 7. Conditions Precedent to the Obligation of Seller and Metromedia
to Close.
The obligation of Seller to close shall be subject to the following
conditions precedent:
7.1 Fulfillment of Covenants. Buyer shall have performed and complied in
all material respects with all of its covenants, obligations and agreements
required by this Agreement to be so complied with by it at or prior to the
Closing, and Buyer shall deliver to Seller a certificate executed by an
executive officer of Buyer so stating.
7.2 Representations and Warranties. The representations and warranties of
Buyer contained in this Agreement shall be accurate in all material respects on
the Closing Date to the same extent as if made on such date, and Buyer shall
deliver to Seller a certificate dated on the Closing Date executed by its
President or Vice President and its Secretary or an Assistant Secretary or its
Treasurer stating that said representations and warranties are accurate in all
respects as of the Closing Date and that all conditions precedent to Closing to
be performed by Buyer shall have been performed.
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7.3 Corporate Approval. Seller shall have received a certified copy of the
resolutions of the Board of Directors of Buyer, certified by its Secretary or an
Assistant Secretary, authorizing the execution of this Agreement and the
consummation of the transactions contemplated hereby.
Section 8. Termination.
In addition to any other provision in this Agreement, this Agreement may be
terminated at any time (i) by mutual consent of all parties, (ii) by either
Buyer or Seller at any time in the event of a breach of the other which remains
uncured for thirty (30) days after notice in writing of such breach, (iii) by
Buyer pursuant to Section 5.6, or (iv) by either Buyer or Seller at any time
after March 31, 1998.
Section 9. Indemnification.
9.1 Survival of Representations and Agreements. The representations and
warranties and agreements made herein are true and binding as of the date hereof
and shall continue in full force and effect for two (2) years after the Closing
Date notwithstanding any investigations which may have been made by any of the
parties prior thereto. Any Claim Notice (as defined in Section 9.5) must be
given within said 2 years.
9.2 Seller's and Metromedia's Agreement to Indemnify. Each of Seller and
Metromedia, jointly and severally, shall indemnify, defend, save and hold
harmless Buyer and its affiliates from any liability, damage, deficiency, loss,
cost or expense, including reasonable attorney fees and any costs of
investigation, defense or settlement of any of the foregoing (herein,
"Damages"), incurred in connection with, arising out of, resulting from or
incident to (i) any breach of any representation or warranty made by Seller in
or pursuant to this Agreement; (ii) any breach of any covenant or agreement made
by Seller in or pursuant to this Agreement; (iii) any liability arising from the
operation of the Theaters on or prior to the Closing Date; (iv) any liability
arising from a written claim, action, notice of investigation, notice of intent
to bring an action or written threat to bring an action in connection with any
alleged ADA violation at any Theater (excluding the Waltham and/or St. Louis
Theaters if Buyer has exercised its rights under Section 5.12 with respect
thereto); (v) any liability imposed upon or resulting from any claims against
Buyer by the Transition Employees for severance or other termination
compensation in connection with their termination by Buyer; or (vi) any Excluded
Liabilities.
9.3 By Buyer. Buyer shall indemnify and save and hold harmless Seller and
its affiliates from and against any and all Damages incurred in connection with,
arising out of, resulting from or incident to (i) any breach of any
representation or warranty made by Buyer in or pursuant to this Agreement, (ii)
any breach of any covenant or agreement made by Buyer in or pursuant to this
Agreement, or (iii) any liability arising from the operation of the Theaters on
or after the Closing Date.
9.4 Cooperation. The indemnified party shall cooperate in all reasonable
respects with the indemnifying party and such attorneys in the investigation,
trial and defense of such lawsuit or action and any appeal arising therefrom;
provided, however, that the indemnified party may, at its own cost, participate
in the investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom. The parties shall cooperate with each other in any
notifications to insurers.
21
9.5 Defense of Claims. If a claim for Damages (a "Claim") is to be made
by a party entitled to indemnification hereunder against the indemnifying party,
the party claiming such indemnification shall, give written notice (a "Claim
Notice") to the indemnifying party as soon as practicable after the party
entitled to indemnification becomes aware of any fact, condition or event which
may give rise to Damages for which indemnification may be sought under this
Article 9; provided that such notice must be given within two (2) years after
the Closing Date. If any lawsuit or enforcement action is filed against any
party entitled to the benefit of indemnity hereunder, written notice thereof
shall be given to the indemnifying party as promptly as practicable (and in any
event within fifteen (15) calendar days after the service of the citation or
summons). The failure of any indemnified party to give timely notice hereunder
shall not affect rights to indemnification hereunder, except to the extent that
the indemnifying party demonstrates actual damage caused by such failure. After
such notice, if the indemnifying party shall acknowledge in writing to the
indemnified party that the indemnifying party shall be obligated under the terms
of its indemnity hereunder in connection with such lawsuit or action, then the
indemnifying party shall be entitled, if it so elects, (i) to assume the defense
and investigation of such lawsuit or action, (ii) to employ and engage attorneys
of its own choice (which shall be reasonably acceptable to the indemnified
party) to handle and defend the same, at the indemnifying party's cost, risk and
expense unless the named parties to such action or proceeding include both the
indemnifying party and the indemnified party and the indemnified party has been
advised in writing by counsel that there may be one or more legal defenses
available to such indemnified party that are different from or additional to
those available to the indemnifying party, and (iii) to compromise or settle
such claim, which compromise or settlement shall be made only with the written
consent of the indemnified party, such consent not to be unreasonably withheld;
provided, however, if the remediation or resolution of any such Claim will occur
on or at any Theater or is reasonably expected to have a material adverse effect
on the indemnified party's business operations, then, notwithstanding the
foregoing, the indemnified party shall have the right to control such
remediation or resolution, including without limitation to assume the defense
and investigation of such lawsuit or action, to employ and engage attorneys of
its own choice to handle and defend the same, at the indemnifying party's cost,
risk and expense, and to compromise or settle such Claim. If the indemnifying
party fails to assume the defense of such claim within fifteen (15) calendar
days after receipt of the Claim Notice, the indemnified party against which such
claim has been asserted will (upon delivering notice to such effect to the
indemnifying party) have the right to undertake, at the indemnifying party's
cost and expense, the defense, compromise or settlement of such claim on behalf
of and for the account and risk of the indemnifying party. In the event the
indemnified party assumes the defense of the claim, the indemnified party will
keep the indemnifying party reasonably informed of the progress of any such
defense, compromise or settlement. The indemnifying party shall be liable for
any settlement of any action effected pursuant to and in accordance with this
Article 9 and for any final judgment (subject to any right of appeal), and the
indemnifying party agrees to indemnify and hold harmless an indemnified party
from and against any Damages by reason of such settlement or judgment.
9.6 Limitations. Neither Buyer nor Seller shall be liable to the other
under this Article 9 for any Damages until the amount otherwise due the party
being indemnified exceeds one percent (1%) of the Purchase Price in the
aggregate, in which case such indemnifying party will be liable to the
indemnified party for all such amounts, in excess of the first one percent (1%)
of the Purchase Price; provided, however, that this limitation shall not apply
with respect to Damages or Claims arising out of a breach of a representation or
warranty contained in
22
Sections 3.16, 3.17 or 3.18; provided, further that this limitation shall not
apply with respect to any damages set forth in Sections 9.2(iv) or (v). In
addition, except for Damages or Claims arising out of a breach of a
representation or warranty contained in Section 3.16, 3.17 or 3.18, Seller shall
have no liability for indemnification in excess of one half of the Purchase
Price. In connection with Damages or Claims arising out of a breach of a
representation or warranty contained in Section 3.16, 3.17 or 3.18, Seller shall
have no liability for indemnification in excess of the Purchase Price.
9.7 Liability and Remedies, etc. No individual representative of any
party shall be personally liable for any Damages under the provisions contained
in this Article 9. Nothing herein shall relieve either party of any liability
to make any payment expressly required to be made by such party pursuant to this
Agreement. The term "Damages" as used in this Article 9 is not limited to
matters asserted by third parties against Seller or Buyer, but includes Damages
incurred or sustained by Seller or Buyer in the absence of third party claims.
Payments by Buyer of amounts for which Buyer is indemnified hereunder, and
payments by Seller of amounts for which Seller is indemnified, shall not be a
condition precedent to recovery. Seller's obligation to indemnify Buyer, and
Buyer's obligation to indemnify Seller, shall not limit any other rights,
including without limitation rights of contribution which either party may have
under statute or common law.
Section 10. Miscellaneous.
10.1 Reformation and Severability. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, the legality, validity and enforceability of
the remaining provisions hereof shall not in any way be affected or impaired
thereby.
10.2 Relief. Seller acknowledges and agrees that in view of the uniqueness
of Seller's business at the Theaters, damages at law would be insufficient for
breach of any of Seller's covenants to sell the Assets to Buyer. Accordingly,
Seller agrees that in the event of a breach or threatened breach by Seller of
such provisions, Buyer shall be entitled to seek equitable relief in the form of
an injunction to prevent irreparable injury. Nothing herein shall be construed
as prohibiting Buyer from pursuing any remedies, including damages, for breach
or threatened breach of this Agreement.
10.3 Further Assurances. Each party hereto shall, from time to time after
the Closing, at the request of any other party hereto and without further
consideration, execute and deliver such other instruments of conveyance,
assignments, transfer and assumption, and take such other actions, as such other
party may reasonably request to more effectively consummate the transactions
contemplated by this Agreement. Seller acknowledges that prior to and/or after
the Closing Date, Buyer may be required by securities and accounting
regulations, or may elect for other business reasons, to engage an independent
public accounting firm to audit the financial statements of the Business for
periods prior to or including the Closing Date. Seller agrees to cooperate with
Buyer in the preparation of such financial statements and the conduct of such
audit, including without limitation, by providing access to all relevant books,
records, files and other data (whether in written or computer-readable form) of
Seller (or, at Buyer's request and at Buyer's expense, by providing copies of
such books, records, files and other date.)
10.4 Notices. Any notice or other communication required or permitted to
be given
23
hereunder shall be in writing and shall be sent by certified mail, return
receipt requested (or by the most nearly comparable method if mailed from or to
a location outside of the United States), or by cable, telex, telegram or
facsimile transmission (receipt confirmed), or delivered by hand or by overnight
or similar delivery service, fees prepaid, to the party to whom it is to be
given at the address of such party set forth below or to such other address for
notice as such party shall provide in accordance with the terms of this section.
Except as otherwise specifically provided in this Agreement, notice so given
shall, in the case of notice given by certified mail (or by such comparable
method) be deemed to be given and received three business days after the time of
certification thereof (or comparable act), in the case of notice so given by
overnight delivery service, on the date of actual delivery, and, in the case of
notice so given by cable, telegram, facsimile transmission, telex or personal
delivery, on the date of actual transmission or, as the case may be, personal
delivery. Any party hereto may change the address designated for notice by
written notice to the other party.
To: Seller
Metromedia International Group, Inc.
Xxx Xxxxxxxxxxx Xxxxx
Xxxx Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
To: Buyer
Silver Cinemas, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
10.5 Expenses. Except as set forth in this Section 10.5, each party hereto
shall bear its or his own costs and expenses incurred pursuant to this Agreement
and the transactions contemplated hereby and all investigations and proceedings
in connection therewith, including without limitation, fees and expenses of
their respective counsel and accountants ("Expenses"). If the Closing does not
occur due to a violation of Section 5.5 of this Agreement, (i) Seller will, in
addition to bearing its own Expenses, the Seller will promptly reimburse Buyer
for its Expenses, and (ii) Buyer will be free to seek additional damages for
breach of this Agreement.
10.6 Entire Agreement. This Agreement, together with the Schedules
referred to herein which are incorporated herein by this reference, and the
other documents, instruments, certificates and agreements referred to herein,
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior negotiations and understandings
and agreements.
10.7 Governing Law. The parties hereto agree that this Agreement shall be
governed by, construed and enforced in accordance with the laws of the State of
New York without giving effect to the conflict of laws rules or choice of laws
rules thereof.
10.8 Number and Gender of Words. When the context so requires in this
Agreement,
24
words or gender shall include either or both of the other genders and the
singular number shall include the plural. Whenever the term "Seller's
knowledge" or a similar term is used in this Agreement it shall include the
actual knowledge of Xxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxx Xxxxxxxxxx, Xxxxx Xxxxxx
and Xxxx Xxxx and the knowledge that reasonably could have been obtained by such
persons through a diligent inquiry of their personnel and files.
10.9 Assignability and Binding Effect. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, their respective successors
and permitted assigns. Unless specifically provided otherwise in this
Agreement, this Agreement and the rights and obligations hereunder are not
assignable without the express written consent of all parties hereto.
10.10 Amendments. This Agreement may not be modified, amended or
supplemented except by a written agreement executed by all of the parties
hereto.
10.11 Counterparts. This Agreement may be executed in several
counterparts, all of which taken together shall be deemed to constitute one and
the same instrument.
10.12 Headings. The headings of sections contained in this Agreement
are for convenience only and shall not be deemed to control or affect the
meaning or construction of any provision of this Agreement.
10.13 Waiver. The failure of any party to insist, in any one or more
instances, upon performance of any of the terms, covenants or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right or
claim granted or arising hereunder or of the future performance of any such
term, covenant, or condition, and such failure shall in no way affect the
validity of this Agreement or the rights and obligations of the parties hereto.
10.14 Third Parties. Except with respect to indemnification under
Section 9, nothing herein expressed or implied is intended or shall be construed
to confer upon or give to any person other than the parties hereto and their
successors or permitted assigns, any rights or remedies under or by reason of
this Agreement.
10.15 Public Announcements. Except as required by law, no press
release or other public disclosure of the transactions contemplated by this
Agreement will be made unless mutually agreed to by Buyer and Seller, which
approval will not be unreasonably withheld. If Seller believes public
disclosure is necessary as a result of Seller or its parent company being a
public entity, Seller will provide Buyer with at least twenty-four hours prior
opportunity to review and comment on the proposed disclosure.
10.16 Purchase Agreement to Control. The terms and conditions of this
Agreement shall control any conflicting terms and conditions set forth in any
Exhibit to this Agreement.
[signature page to follow]
25
IN WITNESS WHEREOF, the parties hereto intending to be legally bound have
caused this Agreement to be executed on the day and year first above written.
METROMEDIA INTERNATIONAL GROUP, INC.
By:
-----------------------------------
Name:
----------------------------------
Title:
--------------------------------
LANDMARK THEATRE CORPORATION
By:
-----------------------------------
Name:
----------------------------------
Title:
--------------------------------
SEVEN GABLES CORPORATION
By:
-----------------------------------
Name:
----------------------------------
Title:
--------------------------------
PARALLAX THEATRE SYSTEMS, INC.
By:
-----------------------------------
Name:
----------------------------------
Title:
--------------------------------
[signatures continued on next page]
26
SAN FRANCISCO LANDMARK THEATRE CORPORATION
By:
-----------------------------------
Name:
----------------------------------
Title:
--------------------------------
WISCONSIN REPERTORY CINEMAS, INC.
By:
-----------------------------------
Name:
----------------------------------
Title:
--------------------------------
THE LANDMARK THEATRE GROUP
By:
-----------------------------------
Name:
----------------------------------
Title:
--------------------------------
SILVER CINEMAS, INC.
By:
-----------------------------------
Name:
----------------------------------
Title:
--------------------------------
27
EXHIBIT A
XXXX OF SALE
For good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, [SELLER] a __________ corporation ("Seller"), does
hereby grant, bargain, transfer, sell, assign, convey and deliver to Silver
Cinemas, Inc., a Delaware corporation ("Buyer"), all right, title and interest
in and to the Assets (as such term is defined in the Agreement for the Purchase
and Sale of Assets dated as of December ___, 1997, by and between Buyer and
Seller (the "Agreement"). Buyer hereby acknowledges that Seller is making no
representation or warranty with respect to the assets being conveyed hereby
except as specifically set forth in the Agreement. Seller for itself, its
successors and assigns hereby covenants and agrees that, at any time and from
time to time forthwith upon the written request of Buyer, Seller will do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged and
delivered, each and all of such further acts, deeds, assignments, transfers,
conveyances, powers of attorney and assurances as may reasonably be required by
Buyer in order to assign, transfer, set over, convey, assure and confirm unto
and vest in Buyer, its successors and assigns, title to the assets sold,
conveyed, transferred and delivered by this Xxxx of Sale.
This Xxxx of Sale is executed and delivered by Seller pursuant to the
Agreement.
Executed at , this day of , 1998.
----------------- ------ --------
[SELLER'S NAME]
By
---------------------------
Its
---------------------------
STATE OF )
----------------------
COUNTY OF ) ss.
----------------------
On _______________________, before me, ___________________, personally appeared
____________________________________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
[SEAL]
---------------------------------
Notary Public in and for said
County and State
